U.S. Retail Sales Probably Rose in May on Rebates, Fuel Prices
Sales at U.S. retailers probably rose in May as Americans started spending their tax-rebate checks, and record gasoline prices inflated receipts at service stations, economists said before a report today.
Purchases rose 0.5 percent, following a 0.2 percent drop the prior month, according to the median estimate in a Bloomberg News survey before the Commerce Department's report. Figures from the Labor Department may show the cost of imported goods surged 2.5 percent last month, led by climbing fuel expenses.
Wal-Mart Stores Inc. is among retailers benefiting from about $50 billion in stimulus checks the government sent out through May as the increase in prices drove consumers to discount chains. The boost may be short-lived as tighter credit, plummeting property values and a weakening labor market signal Americans will retrench once the extra cash is spent.
“The rebates should provide some boost to consumer spending, but the stimulus checks won't provide the economic lift policy makers had hoped for,'' said Ryan Sweet, an economist at Moody's Economy.com in West Chester, Pennsylvania. “The surge in gasoline prices is diluting the benefit.''
The Commerce Department's report is due at 8:30 a.m. in Washington. Forecasts ranged from a decline of 0.3 percent to a 1.2 percent gain. Excluding autos, sales probably rose 0.7 percent, the most since November, according to the survey.
The Labor Department's figures on import prices, due at the same time, will probably show costs accelerated after a 1.8 percent increase in April. Predictions ranged from gains of 0.5 percent to 4 percent.
$4 Gasoline
The cost of gasoline has risen 33 percent so far this year, reaching a record exceeding $4 a gallon this week for regular unleaded, according to AAA. Food prices have also surged, prompting shoppers to hunt for bargains at discounters payday loans in one hour.
Wal-Mart, the world's largest retailer, had a 3.9 percent jump in same-store sales last month as consumers bought cut-rate staples and took advantage of promotions linked to the tax rebates.
“Many of our customers need to live from paycheck to paycheck,'' Wal-Mart Chief Financial Officer Thomas Schoewe told reporters last week. “The amount they're spending on basics is a big portion of the total basket.''
Consumers cashed $350 million in rebate checks at Wal-Mart stores, Schoewe said. The retailer doesn't know how much of that was spent at the chain.
Rebates Spent
Households will spend about $90 billion more this year on gasoline if prices remain around current levels, according to a forecast by economists at Credit Suisse Holdings in New York. That will consume about 80 percent of the more than $110 billion in rebate checks the government will eventually send out.
“Consumers should start to respond to the additional cash by increasing spending,'' said Michael Hanson, an economist at Lehman Brothers Holdings Inc. in New York. “The rebate will act like a shot of caffeine,'' even as the effects “will be temporary.''
Consumers aren't buying big-ticket items such as automobiles, reflecting slumping confidence and weakening household finances. Cars and light trucks sold at a 14.3 million annual pace in May, the fewest since July 1998, according to industry data.
Spending may grow at an annual rate of 0.8 percent this quarter, down from a 1 percent pace in the prior quarter and the weakest since the first three months of 1995, according to the median estimate of economists surveyed by Bloomberg News this month.